Between work-at-home and hybrid models, worries about recession, and the growing recognition of the potential for massive obsolete stock, there is a lot of concern about the office market. As a Morningstar Credit Information & Analytics (MCIA) report recently noted, the combination of factors "has people speculating that aging office properties may replace regional malls as the bane of commercial mortgage-backed securities investors' existence."

Cap rates and net cash flows ultimately drive valuations, but the firm notes the amount of uncertainty around them. Cap rates depend on price discovery, but that is currently severely limited with the reduction of transactions.

Vacancies will drive down revenue and also affect ongoing rents for everyone because of increased supply, although discussions with many experts does point to the potential for a mitigating factor in at least some property classes. Even if hybrid becomes a dominant model, a bulk of companies are interested in minimizing pure work-from-home, and with hybrid typically having all employees in place at least a few days a week, there's a need for enough room to fit all of them simultaneously, so it may be that average utilization falls while vacancy might not.

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